On June 8, 2001, a complaint was filed seeking permanent injunctions against World Homes, Inc. ("World Homes") and Merle Ferguson alleging violations of Sections 5(a), 5(c) and 17 (a) of the Securities Act, and Section 10(b) of the Exchange Act and Rule l0b-5 thereunder, and against Susan Donohue for violations of Sections 5(a) and 5(c) of the Securities Act. The Commission's complaint also seeks civil money penalties against Ferguson.

The Complaint alleges that from approximately January 2000 through February 2001, World Homes, through its President and Chief Executive Officer, Merle Ferguson, distributed several false and misleading press releases misrepresenting, among other things, the following material facts: 1) that World Homes operated and maintained a production facility for its cement product; 2) that World Homes possessed financing loans of fifteen million dollars; and 3) that World Homes had generated over $480 million in contracted business. These false press releases resulted in an increase in the price of World Homes' common stock and an increase in the volume of shares traded on the OTC Bulletin Board.

In addition, it is alleged that from on or about July 16, 1999, through on or about February 20, 2001, World Homes made nine filings on Form S-8, registering 4,892,977 shares with a stated maximum value of $3,777,313. Many of these shares were issued to Ferguson and Donahue, or entities controlled by them. These shares were allegedly issued in large part not to compensate those employees, but to raise capital for World Homes. Ferguson and Donahue sold these shares into the market and remitted most of the proceeds to World Homes, which used the funds to finance operations. The complaint alleges Ferguson and Donahue filed no registration statement with respect to the resales and no exemption from registration was available with respect to these offers and sales.